InformationWeek

May 10, 1999

Y2K Under Control

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The Y2K Package:

Y2K Under Control

Financial Services

Transportation

Government

Telecom

Utilities

Year 2000 managers at major businesses express views in line with the majority of respondents. "We've come to the conclusion that U.S. utilities and telecom are coming along well," says Don Costantino, corporate director of year 2000 at General Motors. GM has done its own tests. Costantino says, "Glitches have been manageable--nothing you could call serious."

But Costantino is worried, as are many others IT executives, about the situation overseas. GM recently deployed 100 trained Y2K assessors internationally, wherever GM has suppliers or manufacturing operations, to identify risks and put together a plan for working with companies and governments to reduce those risks.

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The biggest impact of the year 2000 date problem has been, and is likely to remain, the cost of Y2K projects. Gartner Group stands by its original projection that puts total worldwide IT spending on year 2000 at somewhere between $300 billion and $600 billion. Add in non-IT costs for such factors as risk management and contingency planning, and the worldwide bill could come close to a staggering $1 trillion. In all, the financial impact of Y2K will fall between $1 trillion and $2 trillion, when litigation costs and business failures are included, says Lou Marcoccio, year 2000 research analyst at Gartner Group.

More than 78 lawsuits have already been filed, Marcoccio says, and 10 times that number are likely to be brought to court. Still, Gartner Group doesn't expect litigation will result in more than a few large settlements, with most cases involving end-user complaints against small software vendors. Legislative efforts at the state and federal levels are under way to encourage opposing parties to avoid lawsuits altogether and to limit financial awards if matters do proceed to court (Oct. 26, 1998,"Y2K: Who's Liable?").

Spending Disclosures
There's little doubt about what most companies in the United States are spending on year 2000: The Securities and Exchange Commission requires disclosure of Y2K projects in financial filings. But while the costs are high, there are also benefits.

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GM's Y2K spending will total about $760 million, which is being spread out over several years at a company that spends more than $4 billion annually on IT. The benefits--aside from continuing business as usual--are substantial. For example, inventories of every piece of computer hardware, software, networking gear, and embedded chips were necessary for GM and other companies to carry out Y2K projects. These inventories are "an absolute gold mine for opportunities such as cost reduction," says GM's Costantino.